The commercial sector is an important part of the Indian real estate market. With REIT and RERA, the market is much stronger than before. However, for those new investors in the market, there are many jargons that they need to know to run a successful business. Although words like rental, cost, adjustment, turn-key, etc. are easy to understand, deep understanding is still needed. Thus, to understand these words in detail; read this blog carefully:
Gross Lease
A gross lease also known as a full-service lease means that the landlord on whom the commercial property is rented is solely responsible for any type of aging and collapse. Here, the landlord pays all the maintenance and repair costs such as taxes, insurance, utilities, etc. with rent received from the employer. The tenant must pay the rent.
Net Lease
The net lease, on the other hand, is the opposite of what we have read above i.e. gross lease. Here, the tenant not only has to pay rent but at the same time, he has to bear all the additional costs such as administration, taxes, utilities, maintenance costs, etc. The lease is divided into three parts:
Single Net Lease: Here, the tenant must pay the rent and part of the payment on the property such as Property, utilities, cleaning, and maintenance services. The remaining charges are paid by the landlord.
Double Net Lease: In addition to rent, the employer must pay the amount of insurance, property taxes, and services. The cost of building renovation and general site maintenance is borne by the owner of the commercial property.
Triple Net Lease: This type of rental works for the landlord. Here, the employer must pay the full rent and must bear the additional costs. Best known as Net Net Lease (N), a landlord, in this case, should negotiate lease terms and lease before signing a lease agreement with the landlord.
Converted Gross Lease: In contrast to the three-fold residual lease, this lease is friendly to the tenant and is, therefore, the most popular in the commercial lease category. Here, the lease agreement can be changed and finalized after an in-depth discussion between the landlord and the landlord. However, costs such as cleaning and electrical equipment are not included in the agreement and should be discussed in advance.
Percentage Lease: It is a type of lease agreement where, without paying basic rent, the employer must also pay a percentage of the total sale over a minimum amount. The two were cut off before signing the agreement and replaced with a lease. Such an agreement is popular in the shopping mall where the tenant rents a place in a mall.
Accident Expense: Accident expenses are those costs that the employer has to pay out of rent. These costs include property insurance, taxes, utilities, maintenance, general space costs, and repairs.
Turnkey Improvement: These are changes a property owner makes just to attract potential tenants to their business environment.
Rental Property Development: The landlord usually makes these changes to help the tenant establish his or her business or office according to his or her needs in the building.
Trade Fixtures: Trade fixtures include items such as computers and furniture that an employer can take if he or she has to leave the rented premises. You cannot take those items that could damage property in any way.
Therefore, when renting any commercial property, a deeper understanding of these terms and their inclusion in the lease agreement is necessary to maintain a good relationship between the property owner and the tenant.